Chip & PIN?! What’s the BG talking about now? Allow me to explain. The latest, more secure, credit cards come with an embedded chip similar to the one you have in your CAC cards. You insert this end into the credit card reader instead of swiping the magnetic strip. A PIN in used in lieu of signature.
Why is this important? Because of all the credit card fraud we have read about, they needed to come up with a better system. We have all read about clever thieves figuring out a way to scan your magnetic strip through a reader they install on the inside of a gas pump or by getting a hold of your number and forging a signature. For these new cards, you insert the chip end into the machine instead of swiping the side of the card through the reader. Same as you use your CAC cards on your computer.
This new system prevents that. With the chip, it creates a unique authorization code for that specific transaction meaning that even if a thief got it, they could not use it for another transaction. The PIN is used to prevent forgery, although CC companies will tell you that they only examine the signature if there is a question of whether you purchased something. Most often the signature is actually used to prove to you that you bought something and many of the times a person questions a charge because they forgot the bought something! With the PIN, the transaction can only take place with the knowledge in your head.
This system has been operational in Europe for ten years and is only now reaching the U.S. Why so long given all the CC fraud here? It was a bit of the chicken and egg. Store owners didn’t want to pop for new machines if no one had cards with chips and CC companies didn’t want to pay for the more expensive chip-embedded cards if there were no machines that could use them.
I have had some chip-embedded cards for about a year now and find that almost no American understands them. I was able to use them on a trip to Germany last month, but had to explain to everyone I was with how to use them. Back in the States, I found many of the new machines which accept chips, either had that function disabled or the clerk thought that I didn’t understand how a credit card worked and patiently explained to me that I had to swipe the magnetic strip and sign. Note that even in Germany, I found several places that still wanted signatures instead of a PIN. This is still more secure than the old way, but it is better if you use the PIN. Note that the cards still have a magnetic strip so you are not SOL if the merchant does not have the new type of reader.
President Obama signed an executive order on 17 Oct. and the new cards are coming in the mail as you read this. Here is the announcement from the DTS site. Don’t forget to update your DTS profile with the new card number. Expect to receive yours any day now and then have the task of explaining to your troops, Marines, Airmen, etc. how they work. Good luck with that!